US President Donald Trump on Monday made good on a promise to slap 25% tariffs on steel and aluminium imports, stepping up a long-promised trade war despite warnings from Europe and China.
The Republican president had unveiled the policy on Sunday aboard Air Force One while flying to the Super Bowl in Louisiana.
Before he signed executive orders imposing the measures, global stock markets rose as traders with “tariff fatigue” appeared to shrug off Trump’s plans.
“Today I’m simplifying our tariffs on steel and aluminium,” Trump said in the Oval Office. “It’s 25% without exceptions or exemptions.”
He also signalled that he would look at imposing additional tariffs on automobiles, pharmaceuticals and computer chips.
Canada and — which Trump has already threatened with tariffs — are the biggest steel importers to the United States, according to US trade data. Brazil and South Korea are also major steel providers.
“President Trump has made it clear that an important part of an America First Golden Age is steel production,” National Economic Council Director Kevin Hassett told CNBC.
The US leader said he was considering an exemption for Australia from the steel tariffs, confirming comments made by Australian Prime Minister Anthony Albanese.
“We have a (trade) surplus to Australia, one of the few. And the reason is they buy a lot of aeroplanes. They are rather far away and need lots of aeroplanes,” he said.
Trump has also promised an announcement on Tuesday or Wednesday on broader “reciprocal tariffs” to match the levies other governments charge on US products.
He imposed sweeping tariffs during his 2017-2021 presidency to protect US industries, which he believed faced unfair competition from Asian and European countries.
‘Losers’
Canadian steelmakers warned of “massive” disruption, while the European Commission said it would “react to protect the interests of European businesses, workers and consumers from unjustified measures.”
French President Emmanuel Macron vowed in an interview aired Sunday to go head-to-head with Trump over his wider tariff threats against the European Union, though he said the United States should focus its efforts on China.
German Economy Minister Robert Habeck said a tariff conflict “only has losers.”
Around 25% of European steel exports go to the United States, according to consultancy Roland Berger.
Britain’s steel industry body called the tariff plan a “devastating blow.”
Trump has already shown his fondness for weaponizing the United States’ power as the world’s largest economy, ordering tariffs on key trade partners China, Mexico and Canada soon after he took office.
He paused 25% levies against Canada and Mexico for a month after both countries vowed to step up measures to counter flows of the drug fentanyl and the crossing of undocumented migrants into the United States.
Tariff fatigue
But Trump went ahead with tariffs on China, the world’s second-biggest economy, with products entering the United States facing an additional 10% levy.
Chinese retaliatory tariffs targeting US coal and liquified natural gas come into play on Monday.
Chinese foreign ministry spokesman Guo Jiakun said Monday that “there is no winner in a trade war and tariff war.”
Trump also focused on steel during a visit by Japanese Prime Minister Shigeru Ishiba last week.
The American leader said he had secured an agreement for Japan´s Nippon Steel to make a major investment in US Steel, instead of seeking to take over the troubled firm.
Trump, who has promised a “new golden age” for the United States, insists the impact of any tariffs would be borne by foreign exporters without being passed on to US consumers, despite most experts saying the contrary.
But he did acknowledge this month that Americans might initially feel economic “pain” from the levies.
Wall Street´s main indices finished up Monday despite the tariff threat. London and Frankfurt set fresh records, while Hong Kong and Shanghai stocks also rose.
“The fact that global equity indices are higher at the start of the week could be a sign of tariff fatigue,” said Kathleen Brooks, research director at trading group XTB.
The dollar also rose against the Canadian dollar, and the Mexican peso and South Korean won on Monday.
